The 787 Dreamliner has been a driver for Boeing so far this year. Image courtesy of Boeing
Boeing reported first-quarter revenue of $23.4 billion, reflecting higher commercial deliveries and mix, defense contract volume and services growth. Generally accepted accounting principals (GAAP) earnings per share (EPS) increased to $4.15 and core earnings per share (non-GAAP) increased to $3.64, reflecting strong performance across the company.
The company's cash flow guidance is increased to between $15/0 and $15.5 billion, driven by improved performance. Full-year EPS guidance is increased by $0.50 to between $16.40 and $16.60, and core earnings per share (non-GAAP) guidance is increased to between $14.30 and $14.50 on performance.
"During the quarter we captured important new business, including an initial contract for 28 F/A-18 Super Hornets for Kuwait, a ground-based midcourse defense program contract extension from the Missile Defense Agency and we delivered the first space launch system intertank hardware to NASA," said Boeing CEO Dennis Muilenburg. "We achieved the first flight of the 737 MAX 7 and delivered the first 787-10 Dreamliner and the first 737 MAX 9. Within our services business, we received a follow-on contract to support the Royal Canadian Air Force's Chinook fleet, captured a landing gear exchange contract for Aeromexico and released Self-Service Analytics to complement our digital solutions portfolio."
Operating cash flow in the quarter of $3.1 billion reflects planned higher commercial airplane production rates, improved performance, and favorable timing of receipts and expenditures. During the quarter, the company repurchased 8.9 million shares for $3.0 billion, leaving $15.0 billion remaining under the current repurchase authorization which is expected to be completed over approximately the next two years.
Total company backlog at quarter-end was $486 billion and included net orders for the quarter of $34 billion. Backlog was up from $475 billion at the beginning of the quarter, which has been adjusted to reflect the adoption of the new revenue recognition standard (ASC 606).
Boeing's FY2018 Q1 financial results
Commercial Airplanes first-quarter revenue was $13.7 billion reflecting higher deliveries and mix (Table 4). First-quarter operating margin increased to 11.0%, reflecting strong operating performance on production programs.
During the quarter, Commercial Airplanes delivered 184 airplanes, including delivery of the first 787-10 Dreamliner to Singapore Airlines and delivery of the first 737 MAX 9 to Lion Air Group. The 737 program reached additional milestones during the quarter, including first flight of the 737 MAX 7 and firm configuration of the 737 MAX 10. The 737 program has captured over 4,400 orders since launch for the 737 MAX, including a recent order from Jet Airways for 75 additional airplanes. Reflecting the strength of the cargo market, Boeing now plans to increase the production rate on the 767 program from 2.5 to 3 per month beginning in 2020. Development on the 777X program remains on track as production began on the first 777X fuselage for structural testing.
Commercial Airplanes booked 221 net orders during the quarter. Backlog remains robust with over 5,800 airplanes valued at $415 billion.
Defense, Space & Security
Defense, Space & Security first-quarter revenue increased to $5.8 billion driven by C-17, international fighters and weapons volume. First-quarter operating margin increased to 11.3% on solid execution and mix.
During the quarter, Defense, Space & Security was awarded an initial contract for 28 F/A-18 Super Hornets for Kuwait, a contract for the final C-17 for India, and an extension for ground-based midcourse defense development and sustainment from the Missile Defense Agency. The company continues to progress on development programs as the KC-46 Tanker program completed fuel on-load certification testing, the first space launch system intertank hardware was delivered to NASA, and the second Commercial Crew spacecraft successfully achieved power-on.
Backlog at Defense, Space & Security was $50 billion, of which 36% represents orders from international customers.
Global Services first-quarter revenue increased to $3.9 billion, reflecting growth in commercial services. First-quarter operating margin was 16.3% reflecting product and services mix.
During the quarter, Global Services was awarded a follow-on contract from the Royal Canadian Air Force to provide full system logistics, engineering support, supply chain, data analytics and training services to their fleet of Chinooks. Global Services also captured a contract from the Royal Saudi Air Force for F-15 repair support services and a contract from Aeromexico for the 787 landing gear exchange program. As part of Boeing AnalytX, the company released Self-Service Analytics to complement our digital solutions portfolio, allowing customers to access data to develop deeper insights into their operations.
At quarter-end, Boeing Capital's net portfolio balance was $2.9 billion. Total pension expense for the first quarter was $40 million, down from $97 million in the same period of the prior year. Revenue in other unallocated items and eliminations decreased primarily due to the sale of aircraft previously leased to customers in the first quarter of 2017. The effective tax rate for the first quarter decreased from the same period in the prior year primarily due to the reduction of the federal tax rate to 21%.
Boeing's 2018 outlook